Tagged: Government

The Central Board of Trustees of EPFO on Tuesday took a decision to pay interest on dormant accounts from April 1, 2016. However, it could not take a decision on making this applicable retrospectively from April 1, 2011 till March 2016.
By: Sarbajeet K Sen | New Delhi | March 30, 2016 4:33 PM | Financial Express

The Central Board of Trustees of EPFO on Tuesday took a decision to pay interest on dormant accounts from April 1, 2016. However, it could not take a decision on making this applicable retrospectively from April 1, 2011 till March 2016.

After its decision to pay interest on dormant accounts from April 1, 2016, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) is likely to consider payment of interest on dormant accounts from April 1, 2011 to March 31, 2016.

“The trade unions had demanded payment of interest on dormant accounts from April 1, 2011 itself. However, the government has deferred a decision on this and has applicable from April 1, 2016 onwards. We will take up the issue in the next meeting of the Central Board of Trustee (CBT),” D L Sachdeva, CBT Member representing All India Trade Union Congress (AITUC) told FeMoney.

The CBT on Monday took a decision to pay interest on dormant accounts from April 1, 2016. However, it could not take a decision on making this applicable retrospectively from April 1, 2011 till March 2016.

The UPA government had announced that no interest will be paid on dormant accounts with effect from April 1, 2011. Dormant accounts are those where no money has been credited for a period of 36 months.

Sachdeva said with nearly Rs 32,000 crore lying in 9 crore dormant accounts, a rough calculation of 8.5 per cent annual rate of interest, the unpaid interest since April 2011 works out to Rs 12,500 crore. It would be substantially larger if compounded annually. “All union representatives in CBT were unanimous that the interest should be credited in these accounts,” Sachdeva said. He said that they have pressed that these issues should be discussed in the finance and investment committee of the CBT after which it should be placed before the board.

Former, Central Provident Fund Commissioner (CPFC), A Vishwanathan, agreed that the government should pay interest on dormant accounts since April 1, 2011. “The original decision itself is questionable. Since the money is held in trust it is not good to hold back interest for the interim period. This is more so because EPF contribution is made by the subscriber to build a corpus which may be required at retirement or when one does not have a job or is unable to work,” Vishwanathan said.

He pointed out that EPFO was making gains on the investment and it was wrong not to reward subscribers. “EPFO is making gains on investment. It is morally dishonest not to pay the subscribers,” Vishwanathan, who headed EPFO at one time, said.

NEW DELHI: On the eve of Holi festival, the government on WEdnesday hiked dearness allowance (DA) by 6 per cent, benefiting over 1 crore central government employees and pensioners.

The hike, which will cost the exchequer an additional Rs 14,724.74 crore annually, will take effect from January 1, 2016, telecom minister Ravi Shankar Prasad told reporters after the meeting of the Union Cabinet which took the decision.

The burden on exchequer would be Rs 6,795.5 core towards central government employees and Rs 7,929.24 crore towards pensioners during 2016-17, he said.

The DA, which will benefit, 50 lakh central government employees and 58 lakh pensioners, will go up from the existing 119 per cent to 125 per cent.

Dearness allowance is paid as a portion of basic pay of employees to neutralize the impact of inflation. Pensioners get dearness relief.

The central government revises DA twice in a year on the basis of one year average of retail inflation for industrial workers as per a pre-determined formula.

In September last year, DA was increased to 119 per cent from 113 per cent with effect from July 1, 2015.

In April last year, the government had hiked DA by 6 percentage points to 113 per cent of the basic pay with effect from January 1, 2015.

Writes to RBI, Trai and Irda; says it will help banks bring down risks
T E Narasimhan | Chennai | November 26, 2014 Last Updated at 12:55 IST | Business Standard
The Credit Information Bureau (India) Ltd (CIBIL), India’s first credit information company, has said that it has written to Reserve Bank of India (RBI), Irda and Trai to enable the Bureau to collect data from service providers that would facilitate the first time borrowers to have an indicative credit score.

Speaking on the sidelines of Fifth Annual Credit Information Conference, organised by CIBIL, M V Nair, chairman, CIBIL said that this will go a long way in helping the Government’s financial inclusion plans.

As of now the lenders have no idea, about an individual’s credit worthiness if that person happens to be first time borrower. By providing this data, the lenders will have an idea of the borrowers, which inturn will bring down the risk.

Industry is going through tough times and their is a strain in asset quality, which is a major concern.

For 8-11% growth in economy, we need about 20-25% bank credit growth. For sustain profitable growth, managing risk is important and information is key for the same, he added.

Nair also said that delinquency in the retail credit portfolio, which includes auto, credit cards, personal loans and housing, is less than 1.5%. “This is a healthy sign,” said Nair, who insisted that accuracy is the key.

There are some concerns on data accuracy provided by financial institutions which leads to lots of mismatch when it comes to calculation of an individual score. The institutions should ensure the accuracy, said Nair.

He pointed out participation of FIs have gone up tremendously, especially public sector banks. Today compliance is 72%, compared to 65% three years back, and CIBIL hopes to increase it to 90% in 3-4 years.

The company is also on the verge of completing data collection from MFIs and will put a system in place that would give credit score for MFIs borrowers. The system will be rolled out in two years, he said.